The Government of India’s decision to remove the Goods and Services Tax (GST) on health and term insurance has triggered a substantial surge in demand across the insurance sector. According to Policybazaar, term insurance purchases have risen by 2.5 times, while health insurance demand has grown by 2.2 times since the announcement in early September 2025. Remarkably, this spike surpasses even the pandemic-era peaks, with continued strong interest weeks later.

The removal of the 18% GST previously applied to premiums has significantly reduced costs, a long-standing barrier for cost-sensitive consumers. Mr. Sarbvir Singh, Executive Director and designated Joint Group CEO of PB Fintech, highlighted that the reform effectively converted latent demand into active interest, emphasizing the government’s message that health and life insurance are essential financial products, not optional expenses.

Industry experts consider the GST waiver a structural catalyst for insurance inclusion in India, where overall insurance penetration remains below the global average. By lowering costs, the reform makes basic protection more accessible for middle-income families, encouraging both first-time buyers and existing policyholders to expand their coverage. Policybazaar identifies three key consumer segments driving this surge: active buyers expanding coverage, procrastinators finalizing long-delayed purchases, and first-time buyers motivated by affordability improvements.

The timing of the GST exemption during the Navratri season also played a role, as consumers viewed it as an auspicious period for new financial investments, further boosting uptake. Collectively, this policy change represents a significant step toward promoting financial protection, insurance culture, and inclusive growth in India.

The GST removal aligns with the government’s broader objectives of enhancing social security, increasing insurance penetration, and promoting financial inclusion. With reduced costs and heightened consumer awareness, the reform is expected to sustain momentum in both health and life insurance sectors, fostering a more resilient and protected population.

In summary, the GST exemption on health and term insurance has sparked unprecedented growth, with term plans up 2.5x and health coverage up 2.2x, transforming India’s insurance landscape. By driving affordability, accessibility, and adoption, the reform strengthens financial protection and supports the government’s vision of a more inclusive insurance ecosystem.

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